MBA -MCQ | Management Control System

Topic: Design of Organization Structure and Control Systems in Corporates

‘Shree Charities’, a non-profit charity organization works with the objective of helping students to get school education. The organization has been able to increase the sources of its income and hence wants to widen the scope of activities to include higher education. In the annual ‘Board Meeting’ convened for the financial year, in addition to regular discussions (analysis of previous year’s trust activities) Trust Members would also discuss the following: Whether or not higher education should be a focus area and if approved, additional funds required, means of raising funds and demand for financial help for higher education. Which of the following types of management control system is being exercised in the above case?

a.Routine Control

b.Expert Control

c.Political Control

d.Judgmental Control

e.Formal Control

The type of management control system being exercised in the above case is: d. Judgmental Control

Judgmental control involves decision-making by top management or key stakeholders based on their expertise, experience, and judgment. In this scenario, the members of the ‘Shree Charities’ organization’s Board Meeting are discussing whether to widen the scope of their activities to include higher education. They are considering various aspects such as additional funds required, means of raising funds, and demand for financial help for higher education. These discussions require the exercise of judgment and decision-making by the board members based on their understanding of the organization’s goals, resources, and the external environment.

Unlike routine control (a) which deals with day-to-day operational aspects, expert control (b) would involve delegating decision-making to experts in the relevant field, and political control (c) refers to the use of power and influence within an organization. Formal control (e) involves established procedures, policies, and rules, while in this case, the discussion seems to revolve around strategic decisions and judgment.

Samsung, the Korean electronics company, which operates in 84 countries has a global design for their phones and computers. However, they adapt each product to local markets. For example, they offer a Smart oven designed explicitly for yogurt fermentation for Bulgaria. In Africa, Samsung offers ‘SafeSurge TV’ to protect the TV from frequent power outages and ‘Duracool Refrigerators’ to keep food fresh for eight hours in the event of a power cut. Which of the following international strategies does Samsung follow?

a. International Strategy

b.Transnational Strategy

c.Standardization Strategy

d.Export Strategy

e.Entry Strategy

The international strategy that Samsung follows is: b. Transnational Strategy

A transnational strategy involves combining elements of both global standardization and local adaptation. In this case, Samsung designs its products with a global design that maintains consistency and brand identity across various countries (global standardization). However, they also adapt their products to meet the specific needs and preferences of local markets (local adaptation). This approach allows Samsung to benefit from economies of scale while also catering to the unique demands of different regions. The examples provided, such as the Smart oven for yogurt fermentation in Bulgaria and the ‘SafeSurge TV’ and ‘Duracool Refrigerators’ for Africa, demonstrate the integration of global and local strategies within their product offerings.

Regarded as one of the best coffees in the world, Jamaican Coffee is very diligently nurtured with pride in the cool hills of the majestic Blue Mountains, almost 8,000 feet above sea level. Jamaican Blue Mountain Coffee which is of very high quality is mostly exported. Clifton Mount Estate, Blue Mountain Coffee Venture Ltd., Coffee Roasters of Jamaica are well-known coffee producing and exporting companies. The uniqueness of Jamaican coffee products leads to a situation where the demand for coffee in the international market is always more than the demand. Which of the following international business strategies is followed by Jamaican coffee producers to market their products in the international market?

a.Multi-Domestic Strategy

b.International Strategy

c.Transnational Strategy

d.Exit Strategy

e.Home Country Strategy

The international business strategy followed by Jamaican coffee producers to market their products in the international market is: b. International Strategy

The International Strategy involves exporting products to foreign markets while keeping a focus on the home country’s strengths and resources. In the case of Jamaican coffee producers, they are producing high-quality Jamaican Blue Mountain Coffee and exporting it to international markets. The coffee’s uniqueness and high quality make it a sought-after product, creating a situation where demand often exceeds supply. This strategy allows Jamaican coffee producers to leverage their distinctive product and cater to the international demand while maintaining their focus on producing coffee in Jamaica’s Blue Mountains.

Buzz Feed, a US-based internet and media company, believes in being a transparent company as it gives greater autonomy to employees. There is very little secrecy. As there is information transparency, employees get a holistic picture of the organization and know where the organization is headed. By talking to each other about the company’s values and plans, people have more freedom to do great work without constantly consulting with a manager about what is right, strategic or possible. Which of the following components of an informal organization is discussed in this case?

a. Hierarchy and line management

b.Perceptions and responses

c.Flow of information

d.Control Systems

e.Horizontal structure of the organization

The component of an informal organization that is discussed in this case is: c. Flow of information

The passage mentions that Buzz Feed operates with transparency, providing a clear flow of information throughout the organization. Employees have access to a holistic picture of the organization’s values, plans, and direction. This open information sharing encourages employees to communicate with each other about the company’s goals and strategies, allowing them more freedom to make decisions without constant managerial intervention. This focus on information transparency and open communication aligns with the concept of the flow of information within the informal organization.

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